Saturday, June 18, 2016

Today’s typical environmentalist and locavore fancies that he or she possesses more and better knowledge than is contained in market prices. He or she is mistaken in his or her arrogance. The environmentalist who moralizes in favor of recycling cardboard containers and the locavore who boasts that he helps the environment by paying a few cents more for locally grown cabbages and cantaloupes focus on a small handful of visible aspects of production and distribution – such as the wood-pulp contents of the cardboard container or the fuel used to transport agricultural produces over long distances – and leaps without warrant to the conclusion that sticking that used cardboard containers into recycling bins, or reducing the amount of fuel burned to transport produce, generates net benefits for the environment. But there is simply no way that the recycling champion or the locavore can really know what he thinks he knows.

How much energy is used to recycle cardboard containers compared to the amount of energy used to produce new cardboard containers? What is the environmental impact of the chemicals used to cleanse used cardboard of the residue from its earlier uses so that that cardboard can be recycled for another use? How much fertilizer and energy – and what sorts – does your local small-scale farmer use to grow kale and cucumbers compared to the amounts and sorts used by the more-distant, larger-scale farmer? What is the full environmental impact of using land in suburbs such as Fairfax, VA, and Dobbs Ferry, NY, to grow vegetables for sale a local farmers’ markets compared to the impact of using that land differently?

The above are only a tiny fraction of all the relevant questions that must be asked and answered with reasonable accuracy before anyone can possess enough knowledge to be confident that recycling or ‘buying local’ are in fact good for the environment. (“Good for the economy” raises a largely separate set of myriad questions, all equally unasked and, hence, equally unanswered by typical environmentalists and enthusiasts of ‘localism.’)

As Pierre and Hiroko correctly note above, the best that anyone can do is to use market prices as guides. These prices are never perfect – such is unavoidable reality – but these prices are far more reliable guides to action than are the suppositions and priors and book knowledge (and book “knowledge”) of any individual person. If the price in Fairfax, VA, of cabbages grown in Texas is lower than is the price in Fairfax, VA, of cabbages grown in nearby Culpeper, VA, then the market is saying that, all things considered, the amount of resources used to grow cabbages in Texas and to make those Texas-grown cabbages available for sale at a Fairfax, VA, supermarket likely is less than is the amount of resources used to grow cabbages in Culpeper, VA, and to make those Culpeper-grown cabbages available for sale at a Fairfax, VA, farmers’ market.

The environmentalist or locavore might not – indeed, almost surely does not – understand why this conclusion is valid. That environmentalist or locavore resists having his or her romantic fancies about reality challenged by something as rational and analytic as economic analysis. But the environmentalist and the locavore are wrong; the prices are right.